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Mint
15-07-2025
- Business
- Mint
India's aviation sector poised for long-term takeoff, says Jefferies; bets on IndiGo and GMR Airports
India's aviation sector is on the cusp of a multi-decade growth trajectory, supported by demographic tailwinds, infrastructure development, and rising consumer demand, Jefferies said in its latest report. Despite temporary hurdles such as safety incidents and supply chain constraints, the brokerage believes the broader structural story remains intact, driven by low air travel penetration and an expanding middle class. To play this, Jefferies continues to like IndiGo's domestic leadership plus the unfolding Int'l expansion and GMR Airports, which is a play on aviation growth, travel retail, land monetisation amid expected moderation on leverage. According to Jefferies, India has emerged as the third-largest aviation market globally by passenger volume, behind only the US and China. However, it still accounts for just 4 percent of global air traffic, even though it houses nearly 18 percent of the world's population. Jefferies highlighted that this disparity signals an underpenetrated market with significant headroom for growth. As per recent projections by IATA and Airbus, air traffic in India is expected to triple over the next two decades. Jefferies noted that the country's air connectivity is evolving steadily with the introduction of new routes and increased international services. Aggressive fleet expansion by domestic carriers and airport infrastructure investments will help drive industry-wide high single to low double-digit growth over the long term. While India's passenger volumes have grown significantly, Jefferies pointed out that it still lags far behind China's aviation infrastructure. China, with over 250 airports and more than 4,000 aircraft, services more than 700 million passengers annually, compared to India's 200 million passengers, 850 aircraft, and 150-160 operational airports. Jefferies emphasized that despite China having an extensive high-speed rail network that competes with domestic air travel, it still far outpaces India in aviation, underscoring the immense potential for India to catch up. Jefferies observed that international travel has become a key growth lever for Indian carriers. Post-Covid, Indian airlines have aggressively expanded international routes. Carriers like IndiGo and Air India are deploying wide-body aircraft and increasing their share of overseas operations. Jefferies noted that IndiGo's international capacity has surged to 30 percent of its overall capacity, up from low double-digits a decade ago, and is likely to reach 40 percent by 2030. This internationalisation is also driving airport revenues through higher travel retail spending, particularly at metro airports like Delhi and Mumbai. While the long-term opportunity remains attractive, Jefferies acknowledged that multiple challenges could act as temporary roadblocks. These include: Global aircraft shortages and supply chain disruptions, which could delay new aircraft deliveries to Indian airlines. High taxation on Aviation Turbine Fuel (ATF), which inflates operational costs. Geopolitical issues, particularly related to airspace access, which have led to longer and more expensive flight routes. Weak domestic Maintenance, Repair and Overhaul (MRO) infrastructure, increasing dependence on foreign facilities. Psychological spillovers from recent air safety concerns, which may impact passenger confidence in the short term. Despite these challenges, Jefferies believes these are short- to medium-term issues that will not derail the sector's long-term growth path. Among listed players, Jefferies reiterated its preference for InterGlobe Aviation (IndiGo) and GMR Airports. It sees IndiGo as a value proxy for the broader consumption theme, benefiting from its dominant domestic market share and growing international presence. The brokerage highlighted IndiGo's forward valuation of ~12x FY26/FY27 EV/EBITDA as attractive, especially when paired with mid-teens earnings growth and a robust aircraft delivery pipeline. Meanwhile, Jefferies also sees GMR Airports as a strong long-term play on India's aviation ecosystem. The company is set to benefit from the growth in non-aero revenue streams, upcoming city-side land development projects, and favorable regulatory outcomes, including a recent win on aero tariffs at Delhi International Airport Ltd (DIAL). These developments enhance revenue visibility and cash flow generation for the airport operator, Jefferies noted. In conclusion, Jefferies said India's aviation sector is poised for multi-year expansion, riding on the back of favorable demographics, rising discretionary incomes, and expanding connectivity. While operational challenges remain, the long-term growth fundamentals are solid. Jefferies believes that leading players like IndiGo and GMR Airports offer attractive opportunities for investors looking to ride this secular growth story. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Indian Express
09-07-2025
- Business
- Indian Express
How India's biofuel potential complements its leadership in sustainable aviation fuel
— Kannan K Global Energy Independence Day, observed on July 10, serves as a timely reminder to embrace cleaner, sustainable energy alternatives. In this context, aviation has emerged as a critical sector as it is estimated to contribute nearly 2.5 per cent of global annual carbon dioxide (CO₂) emissions, alongside almost 4 per cent of the total anthropogenic contribution to global warming, Therefore, focus has been shifted to solutions like sustainable aviation fuel (SAF), which is likely to account for over 60 per cent in decarbonisation. India can potentially manufacture 40 million tonnes of SAF by 2050, which positions it as a key player in shaping a greener, more resilient aviation future. Let's understand SAF and its key environmental benefits. Aircraft emit water vapour, soot, sulfur aerosols, nitrogen oxides (NOₓ), which contribute to the formation of contrails – clouds that form when water vapour condenses and freezes around small particles (aerosols) in aircraft exhaust. All of these factors have additional warming effects on the atmosphere. Moreover, aviation's share in global emissions is expected to increase due to two key reasons. Currently, less than 10 per cent of the global population relies on air travel. But this number is projected to more than double in the coming decades. Second, unlike aviation, other high-emission sectors such as electricity, cement, and steel production are gradually moving to greener alternatives. In this context, Sustainable Aviation Fuel (SAF), also known as aviation biofuel, has emerged as a credible alternative with the potential to reduce aviation-related emissions. SAF is made from sustainable sources and has characteristics similar to Aviation Turbine Fuel (ATF), but with a significantly lesser carbon footprint. It is a 'drop in' fuel, meaning it can be blended with ATF without requiring any change in the existing machinery of aircraft. SAF can be derived from a range of materials, including — Oils and fats such as Used Cooking Oil (UCO), oil-rich seeds from plants, algae oils, animal fats — Municipal Solid Waste (MSW) — Agricultural and forestry residues such as wood waste, sugarcane bagasse, corn stover, husks and straw, sugars and starches. There are various methods to produce SAF, with each using different combinations of raw materials. For SAF to be truly sustainable, it is important that the feedstock used in its production does not compete with food production, cause deforestation, or harm biodiversity. SAF offers multiple benefits. The primary advantage is its ability to significantly reduce emissions and its compatibility with the current global aircraft fleet. It means SAF can be used without modifications to existing planes, engines, or fueling infrastructure. It is estimated that SAF has the potential to reduce GHG emissions in air travel by up to 80 per cent compared to conventional jet fuel. In addition to SAF, there are other innovations like Renewable Fuels of Non-Biological Origins (RFNBOs). It is produced using renewable electricity through Power to Liquid PtL technology that combines Green Hydrogen with Carbon captured from atmospheric CO₂. It offers the potential for even net negative emissions. SAF combustion produces far less harmful gases and particulate matter, contributing to cleaner skies. The adoption of these biofuels can lead to new demand for feedstock and open new revenue streams in agriculture and waste management. In addition, diversification of fuel sources in the aviation sector can help reduce import dependence and protect the sector from global oil price volatility. This, in turn, could lead to a more stable aviation sector, possibly making air travel accessible to larger sections of society. Moreover, SAF adoption will also generate employment opportunities in the sustainability sector. However, despite these benefits, there are a few barriers to the widespread adoption of SAF. First, the cost of producing these biofuels, which is more than double that of conventional fuels, makes its large-scale adoption difficult for airlines without passing the burden onto consumers. The production, storage, blending, and transportation of SAF require the development of new infrastructure, which would add significantly to the initial cost of adoption. Another key issue is the availability and sustainability of feedstock required for SAF production. The characteristics and variety of necessary feedstock mean that there is no guarantee of year-round supply. Further, there is a significant risk that the production process can have adverse environmental impacts if not managed properly. For SAF to be considered truly sustainable and to ensure a significant reduction in GHG emissions, it is crucial to ensure that its production does not have negative social or environmental impacts. Notably, there is now a global push to increase the blending of SAF in commercial aviation. The International Civil Aviation Organisation (ICAO) – the UN's specialised agency for the development of air transport – has established the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). It mandates that international airlines must offset their emissions growth post-2020, and the use of SAF is incentivised as a compliance mechanism. Similarly, the European Union's ReFuelEU Aviation initiative has introduced binding SAF blending targets, aiming for 2 per cent SAF by 2025, 6 per cent by 2030, and 70 per cent by 2050, with sub-mandates for synthetic fuels. Another innovative mechanism is the World Economic Forum's Clean Skies for Tomorrow initiative, which has set the blending target of 10 per cent SAF by 2030. It also seeks to address the high cost of SAF through innovative financing and supportive policy frameworks. However, India has a nuanced and pragmatic approach to SAF, advocating for nationally determined targets rather than binding international mandates. India's position is based on the twin goals of prioritising energy security and food security, and seeking to balance sustainability goals with passenger demand. Despite these reservations, India is a party to the CORSIA and is positioning itself to be a key player in the global SAF landscape. Notably, the Global Biofuels Alliance (GBA) was launched by India during the G20 Summit in New Delhi in 2023 with the aim to expedite the worldwide adoption of biofuels, including SAF. India has also set SAF blending targets of 1 per cent for domestic airlines by 2025 and 1-2 per cent for international flights by 2027-2028, and 5 per cent by 2030 and the potential to scale up to 15 per cent by 2040. The abundant supply of agricultural residues bolsters India's goal of becoming SAF exporter. However, challenges like high costs and underdeveloped supply chains need to be taken care of. To address such issues, policies like tax incentives and public-private partnerships have been proposed. SAF presents a near-term, drop-in solution to reduce emissions from the aviation sector while longer term decarbonisation technologies continue to evolve. Despite existing challenges, the international consensus to push for SAF through initiatives like the CORSIA and ReFuelEU offers hope for overcoming barriers to large-scale adoption. For India, SAF provides an opportunity to leverage its resources to be a market leader in the sector and make meaningful contributions to global decarbonisation efforts, while also keeping local realities and national priorities in mind. What is Sustainable Aviation Fuel (SAF), and how does it differ from conventional aviation fuel? What are the key environmental benefits of adopting SAF in the aviation sector? Why is SAF referred to as a 'drop-in' fuel? What are the primary feedstocks used in SAF production? How can India leverage its agricultural and waste resources to become a global exporter of SAF? How has India positioned itself in the global SAF landscape, and what are its national blending targets? What are the major global initiatives for promoting SAF adoption? (Kannan K is a Doctoral candidate at the Centre for Economic and Social Studies, Hyderabad) Share your thoughts and ideas on UPSC Special articles with Subscribe to our UPSC newsletter and stay updated with the news cues from the past week. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.
Deccan Herald
30-06-2025
- Business
- Deccan Herald
GST Council: PwC suggests petro-products' inclusion, lowering tax slabs
PwC also made a case for levying GST on petroleum products, starting with Aviation Turbine Fuel (ATF), to remove the cascading effect and cash flow problem of the industry.
Time of India
30-06-2025
- Business
- Time of India
GST @8: PwC suggests petro-products' inclusion, lowering tax slabs
The GST Council, comprising finance ministers from the Centre and states, should simplify compliance, reduce tax slabs to three, and broaden the base by bringing petroleum products under GST, a PwC India report said on Monday. Goods and Services Tax (GST), launched on July 1, 2017, completes eight years on Monday. GST subsumed about 17 local taxes and 13 cesses into a five-tier structure, simplifying the tax regime. Over the last 8 years, the average monthly GST collection rose from Rs 90,000 crore in 2017-18 to Rs 1.84 lakh crore in 2024-25 (April-March). The collections touched a record high of Rs 2.37 lakh crore in April 2025. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Duong 17-8: Unsold Furniture Liquidation 2024 (Prices May Surprise You) Unsold Furniture | Search Ads Learn More Undo "GST in India now stands at a critical juncture where aligning with global trade dynamics is essential. The evolving landscape of international trade, coupled with the growing need to attract investments in the manufacturing and global capability centre (GCC) sectors, calls for a GST framework that is agile, investor-friendly, and globally competitive," the PwC report said. Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are at the lowest 5 per cent slab Live Events "A transition from 4-tier to a 3-tier rate structure would reduce interpretational disputes, improve tax certainty and simplify compliance," PwC said. A comprehensive review of GST rate slabs is required to minimise the disparity between the GST rate on inputs as against that on output, especially for sectors such as electronic vehicle, aviation and e-commerce, which face credit accumulations on account of the inverted tax structure, it added. PwC also made a case for levying GST on petroleum products, starting with Aviation Turbine Fuel (ATF), to remove the cascading effect and cash flow problem of the industry. Petrol, diesel, natural gas and other petroleum products continue to be excluded from the GST regime and remain subject to central excise duty and state VAT. Such products can be brought within the ambit of GST only upon a specific recommendation by the GST Council, comprising finance ministers from states and the Centre. The primary concern, particularly among states, is that subsuming these commodities under GST would lead to a revenue shortfall. "A policy change that includes these items under GST, along with a system to protect state revenues, would simplify the tax structure, ease cash flow issues for businesses, and support the original goals of GST," the report added. In the GST Council meeting held in December 2024, states rejected a proposal to include ATF, or jet fuel, under GST.
Time of India
30-06-2025
- Business
- Time of India
Eight years of GST rollout: PwC India proposes three-slab structure, inclusion of petro-products to ease compliance
AI image As the Goods and Services Tax (GST) marks eight years since its rollout, PwC India has called for key reforms, including a simplified three-rate structure and the phased inclusion of petroleum products under the GST ambit, starting with Aviation Turbine Fuel (ATF). The GST regime, introduced on July 1, 2017, replaced 17 local taxes and 13 cesses with a unified indirect tax framework. Monthly GST collections have grown from an average of Rs 90,000 crore in 2017-18 to Rs 1.84 lakh crore in 2024-25. In April 2025, revenues peaked at a record Rs 2.37 lakh crore. In its report, PwC said the time is ripe for aligning India's GST system with global trade dynamics and attracting greater investments. 'GST in India now stands at a critical juncture where aligning with global trade dynamics is essential,' the PwC report stated, quoted PTI. Currently, GST has four tax slabs — 5%, 12%, 18%, and 28%. PwC has suggested reducing the framework to three tiers to minimise disputes, enhance tax certainty, and simplify compliance. It also noted that sectors such as electric vehicles, aviation, and e-commerce are struggling with inverted duty structures, leading to credit accumulation. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Buy One, Get One Free, Up To 50% Discount, Expiring Soon Original Adidas Get Offer Undo The report also recommended bringing petroleum products under GST — beginning with ATF — to resolve cascading tax effects and improve industry cash flows. Petrol, diesel, natural gas, and other fuels remain outside GST and are still taxed under central excise and state VAT, according to PTI. 'A policy change that includes these items under GST, along with a system to protect state revenues, would simplify the tax structure, ease cash flow issues for businesses, and support the original goals of GST,' the report added. States have been reluctant to accept such reforms due to revenue concerns. In the GST Council meeting held in December 2024, a proposal to include ATF under GST was rejected by several states. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
